State Energy Program Notice 18-01

Effective Date: February 7, 2018

SUBJECT: PROGRAM YEAR 2018 STATE ENERGY PROGRAM FORMULA GRANT GUIDANCE

1.0 PURPOSE l

To establish Grant Guidance and management information for the State Energy Program (SEP)

formula grants for program year (PY) 2018, including PY 2017 allocations as a placeholder until

final PY18 allocations are available, metrics, the Administrative and Legal Requirements

Document (ALRD), the Annual Summary template, and Application Checklist. The Program Year

2018 SEP Formula Grant Guidance (“Guidance”) and the attached Reference Materials apply to

SEP grant funds received through regular federal appropriations.

SEP emphasizes the state’s role as the decision maker and administrator for program activities

within the state that are tailored to their unique resources, delivery capacity, and energy goals.

Project Officers maintain a partnership with states using hands-on engagement resulting in a

deep understanding of project performance.

2.0 SCOPE

The provisions of this Guidance apply to states, territories, and the District of Columbia applying

for formula grant financial assistance under DOE’s SEP. Much of the information in this

Guidance is summarized from the volumes of the Code of Federal Regulations (CFR) applicable

to SEP, namely 10 CFR Part 420 (covering SEP), and 2 CFR Part 200 as amended by 2 CFR Part

910 (the DOE Financial Assistance Rules). The CFR can be accessed at:

http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title02/2cfr200_main_02.tpl

These regulations are the official sources for program requirements.

2.1 ELIGIBLE APPLICANTS

In accordance with 2 CFR 910.126 and DOE Program Rule 10 CFR Part 420, eligibility for award is

restricted to States, Territories, and the District of Columbia (hereinafter “States”) applying for

formula grant financial assistance under SEP.

3.0 LEGAL AUTHORITY

SEP is authorized under the Energy Policy and Conservation Act, as amended (42 U.S.C. 6321 et

seq.). All grant awards made under this program shall comply with applicable laws including,

but not limited to, the SEP statutory authority (42 U.S.C. § 6321 et seq.), and 10 CFR 420, and 2

CFR 200 as amended by 2 CFR 910.

4.0 PROGRAM OVERVIEW & GOALS

SEP provides 50 states, the District of Columbia, and the five U.S. territories annual funding

through formula grants to enhance energy security, advance state-led energy initiatives, and

maximize the benefits of decreasing energy waste. SEP emphasizes the state’s role as the

decision maker and administrator for program activities within the state that are tailored to

their unique resources, delivery capacity, and energy goals.

SEP works with State Energy Offices (SEOs) to address the following goals:

• Increase the energy efficiency of the U.S. economy;

• Implement energy security, resiliency, and emergency preparedness plans;

• Reduce energy costs and energy waste;

• Support local governments in targeting underserved sectors (e.g. public housing,

multifamily housing, small businesses, rural communities, hospital or healthcare

facilities, wastewater treatment facilities, or community facilities) for energy efficiency

improvements;

• Increase investments to expand the use of energy resources abundant in states; and

• Promote economic growth with improved environmental quality.

SEP seeks to promote the efficient use of energy and reduce the rate of growth of energy

demand through the development and implementation of specific state energy programs. Of

particular interest are state-led efforts that address energy affordability, reliability, and

resilience. For example, projects that make distributed generation more affordable could

enable continuous operation of communities after extreme weather or other events that could

or have already disrupted their power systems, thereby creating a more energy resilient

community whenever such extreme weather events occur.

4.1 PROGRAM ACTIVITIES & OUTCOMES

SEOs play a vital role in establishing plans and strategies to achieve state-led energy goals and

priorities, reduce energy costs, and increase economic competitiveness. State-led efforts also

increase resilience by enhancing grid reliability through energy savings technologies or

distributed generation. Examples of state-led activities include:

• State Energy Planning;

• Low-Cost Financing Programs for Energy Efficiency;

• Energy Savings Performance Contracting;

• Innovative Energy Technology Demonstration Projects;

• Partnerships with Local Governments for Energy Efficiency Improvements;

• School and Public Building Retrofit Programs; and

• Energy Emergency Planning and Response.

Since 2010, SEP has provided states and territories with more than $300 million in financial

assistance, resulting in a wide range of benefits to states, including:

• Reduced energy waste in more than 20,000 buildings (125 million square feet) through

energy efficiency upgrades;

• Installation of more than 60,000 renewable energy systems (8 million kilowatt hours);

• Education of more than 2 million people in performing energy audits and upgrades;

• Implementation of energy security, resiliency, and emergency preparedness plans;

• Development of state-led strategic energy initiatives;

• Investments to expand use of energy resources abundant in a state;

• Successful piloting of innovative energy projects with the private sector, K-12 schools,

and universities;

• Execution of Energy Savings Performance Contracts to undertake retrofit projects in

public facilities; and

• Development of implementation models that serve as “how-to” guides for other states

who wish to replicate the programs that are achieving energy efficiency savings.

4.2 SEP NATIONAL EVALUATION

Accountability and transparency in the expenditure of federal funds continue to be a high

priority in PY 2018 for both DOE and the states. DOE conducted a full-scale SEP National

Evaluation covering program activities carried out both prior to the Recovery Act (PY2008) and

during the Recovery Act period. Among other findings, the study concluded that every SEP

dollar spent resulted in $4.50 in annual energy cost savings over the lifetime of installed

measures. Oak Ridge National Laboratory managed the effort, and a team of evaluators

conducted the evaluation. The project began in October 2010 and was completed in 2015. The

evaluation was released on October 6, 2015 and is posted at

http://www.energy.gov/eere/wipo/downloads/state-energy-program-national-evaluation

4.3 TECHNICAL ASSISTANCE

DOE will continue to provide technical assistance to states in PY2018. DOE provides states with

technical assistance and guidance in a collaborative effort to assist with implementation of

efficient and effective programs. For example, states share information with DOE and each

other in a peer-to-peer facilitated dialogue about the challenges they encounter, how they

overcome those challenges, and barriers to implementing effective programs. Technical

assistance is available in many areas, including developing and implementing energy plans;

paying for energy initiatives; designing and implementing energy programs, and accessing and

using energy data. Requests for technical assistance should be made through the state’s DOE

Project Officer.

The State and Local Solution Center is an online tool that provides resources to state and local

governments and K–12 schools for designing and implementing effective energy programs to

help achieve the goals they have identified as state and local priorities. By championing state

and local leadership, addressing specific market barriers, and promoting standardized

approaches, the State and Local Solution Center aims to help states, local governments, and K-

12 schools take energy efficiency and renewable energy to scale in their communities.

The State and Local Solution Center supports the U.S. Department of Energy's State Energy

Program, Weatherization Assistance Program, and the Better Buildings Initiative.

http://energy.gov/eere/slsc/state-and-local-solution-center

See also the Better Buildings Solution Center website:

https://betterbuildingssolutioncenter.energy.gov/

DOE conducted an SEP training meeting in Golden, Colorado in October 2017. SEP will consider

facilitating additional forums in future program years. States are encouraged to budget funds in

their SEP Applications to attend the training forums.

5.0 FUNDING

Funding for all awards and future budget periods is contingent upon the availability of funds

appropriated by Congress for the purpose of this program and the availability of future-year

budget authority.

5.1 FORMULA ALLOCATIONS SEP is currently operating under a Continuing Resolution for Fiscal Year (FY) 2018. Grantees should

develop their State Plans using FY17 SEP allocations as a placeholder until DOE issues final FY18

allocations. Once a FY18 budget is passed and signed by the President, DOE will issue State Energy

Program Notice 18-2, Program Year 2018 Grantee Allocations, and begin the budget modification

process, if necessary.

See 10 CFR Part 420.11 for the allocation process.

5.2 COST MATCH

States must contribute matching funds (cash, in-kind, or both) in an amount no less than 20

percent of their total federal formula award each year. States must demonstrate the

contribution (cash, in-kind or both) of an amount no less than 20 percent of every federal dollar

that is spent each program year. The 20 percent state match requirement must be met each

year, not over the duration of the grant award. Failure to meet this requirement each program

year may result in disallowed costs.

Stripper Well funds and Diamond Shamrock funds may be used toward the 20 percent non-

Federal cost match requirement. Chevron, Warner Amendment, and Exxon funds may not be

used towards the 20 percent non-Federal cost match requirement, but may be included in the

project budget.

The Recipient may not use certain sources of funding to meet its cost match obligations

including, but not limited to:

• Revenues or royalties from the prospective operation of an activity beyond the project

period;

• Proceeds from the prospective sale of an asset of an activity;

• Federal funding or property (e.g., Federal grants, equipment owned by the Federal

Government);

• Expenditures that were reimbursed under a separate Federal program; or

• Bank loans from financial institutions (funds borrowed from a financial institution, which

will later be paid back in full).

States must include in their applications a letter from each third party contributing cost match

(i.e., a party other than the state submitting the application) indicating that the third party is

committed to providing a specific minimum dollar amount of cost match. The following

information must be provided for each third party contributing cost match: (1) the name of the

organization; (2) the proposed dollar amount to be provided; (3) the amount as a percentage of

total Federal funds allocated; and (4) the proposed type of cost match – cash, services, or

property.

Under the authority contained in 48 U.S.C. 1469a the cost matching requirement is waived for

Insular Areas of the Virgin Islands, Guam, American Samoa, the Trust Territory of the Pacific

Islands, and the Government of the Northern Mariana Islands. These Insular Areas may apply

for funding and will not have to provide cost match to be eligible to receive funds.

5.3 NEW ACTIVITIES FUNDED UNDER SEP

Any new SEP initiatives, including those funded through the use of Petroleum Violation Escrow

(PVE) funds, must be approved in writing prior to implementation by the appropriate

Contracting Officer via amendment to the current grant award.

Recipients must ensure that all proposed uses of Stripper Well funds outside of the State

Energy Program have prior review and approval by DOE Headquarters. Proposals should be

submitted through the following email address: sep-pve@ee.doe.gov. Please send a copy of

the request to your Project Officer. This proposal should include a description of the work along

with the timeframe and budget associated. Any use of Stripper Well funds within the State

Energy Program must be included in a market title.

5.4 PROGRAM INCOME

DOE encourages states to earn income in connection with SEP activities to defray program

costs. If the State Plan includes such activities, states should include an estimated amount of

earned income in the budget portion of the Grant Application. Program income is defined in

federal regulations as gross income earned by the recipient that is directly generated by a

supported activity or earned as a result of the award. Program income includes but is not

limited to:

• Income from fees for services performed.

• The use or rental of real or personal property acquired with grant funds.

• The sale of commodities or items fabricated under a grant agreement.

• License fees and royalties on patents and copyrights.

• Payments of principal and interest on loans made with grant funds.

Program income does not include interest on grant funds except as otherwise provided in this

subpart, program regulations, or the terms and conditions of the award. Nor does it include

rebates, credits, discounts, refunds, etc., or interest earned on any of them. Interest earned

through loan fund programs generated by grant-supported activities is treated as program

income.

(See 2 CFR Part 200.307 and 2 CFR 200.80 for further information.)

5.5 REVOLVING LOAN FUNDS

When a state uses funds for an established revolving loan fund, they are treated as obligated or

encumbered. Once such a program is in place, returned principal and interest collected may be

used to make additional loans or to fund the operations of the revolving loan program.

When DOE approves funds for a revolving loan fund, the state assumes responsibility for the

stewardship and ultimate recapture of the principal and any interest at the end of the approved

life of the program. These funds must eventually be closed out and a final accounting submitted

to DOE. The report should include the amounts of interest collected and principal repayment.

The state must apply the remaining principal and interest to other uses in the program for

which they were originally authorized, including a decision on a reasonable timeframe for

expenditure. Re-authorization of funds used in the revolving loan program will be based on

state proposals and program rules and regulations. The interest would be considered program

income when the program ends, and the final accounting report would reflect the balance of

funds remaining over and above the original principal after subtracting any operating expenses.

5.6 LOAN LOSS RESERVES AND OTHER FINANCING PROGRAMS

On May 20, 2016 DOE issued revised program guidance on the use of Loan Loss Reserves (LLR)

attached to revolving loan programs under SEP.

The guidance outlines conditions that must be met for LLR eligibility, and also describes eligible

uses of several other financing mechanisms. For complete information, see SEP Program

Notice10-008E, “Guidance for State Energy Program Grantees on Financing Programs.”

http://www.energy.gov/sites/prod/files/2016/07/f33/SEP%20Program%20Notice%2010-

008E.pdf

6.0 APPLICATIONS FOR SEP ANNUAL FORMULA GRANTS

6.1 OVERVIEW

The application package for SEP grants consists of the State Plan and a number of required

forms. The State Plan is the heart of the application package. It is divided into three sections –

the Budget, the Master File, and the Annual File (see section 6.3 below).

Applications must be submitted in accordance with the PY 2018 SEP Administrative and Legal

Requirements Document (ALRD). Application due dates are identified on the cover page of the

ALRD.

As a reminder, application documents, forms, and data submitted to SEP may be made

available to the public at DOE’s discretion following all applicable laws and regulations that

protect confidential or proprietary information.

6.2 NEW AWARDS

All new awards will continue to be 3-year awards. The new awards will consist of a 3-year

Project Period with three 1-year Budget Periods, contingent on availability of funds. A new

application is required to be submitted the 1st year. The new application should reflect the first

year’s Federal Allocation, the first year’s Cost Match, and other first year contributions. Please

note that the new awards cannot include any carryover funds from prior awards. In subsequent

years, a continuation application will be required reflecting that year’s allocation and any

carryover.

Extensions to existing awards will not be authorized except in cases of extraordinary

circumstances. It is DOE’s expectation that states will spend out their entire DOE award by the

end of the 3rd year. However, DOE will consider extension requests for extraordinary

circumstances. Extraordinary circumstances include the loss of personnel for an extended

period of time where a significant portion of the budget goes to personnel; a change in

leadership that necessitates, or a decision by leadership resulting in, a significant change in

program plans that significantly delays, or significantly alters, spending; a significant (over three

months) freeze on spending; or a natural disaster. No more than one extension per award will

be considered.

6.3 STATE APPLICATION

The State Application consists of a Standard Form 424, Standard Form 424A, Budget

Justification, Master File, Annual File, various certifications, a link to the state’s latest single or

program-specific audit as required by 2 CFR 200 Subpart F, an indirect rate agreement (if

applicable), and an environmental questionnaire (if applicable).

Program regulations govern all funds assigned to SEP activity use, whatever their source.

Appropriated funds, PVE funds, an estimated amount for program income, and the state share

must all be listed in the budget portion of the Grant Application. All funds must then be spent

on the activities described in the Grant Application and addressed in the financial and

performance reports required under the grant.

6.3. A. STANDARD FORM 424

A completed and signed Standard Form 424 containing current information must be submitted.

Please ensure all sections have been updated to reflect any changes. Section 18 of this form

should reflect new funds only. Please verify compliance with Section 19 Executive Order 12372.

http://www.whitehouse.gov/omb/grants_spoc/

The list of certifications and assurances referenced in Field 21 may be found at:

http://energy.gov/management/downloads/certifications-and-assurances-use-sf-424. Once

the SF424 is completed, add an attachment to the document and provide the name, phone

number and email address for the Principal Investigator and the Business Officer. These

should be re-validated every year.

6.3 B. BUDGET

The budget includes Standard Form 424A and a Budget Justification. Each of these forms should

be completed following the guidelines set out below.

6.3. B.1. Standard Form 424A: Applications must include a budget for all funds applied for

including federal, PVE, and state match. Standard Form 424A should be completed as follows:

• Section A: Budget Summary Lines 1-4, Columns (a) through (g). On line 1, enter new and

unexpended DOE funds. Estimated carryover funds should be listed in the unobligated

columns. Use a separate line for each funding source, e.g., PVE funds, state match, etc.

• Section B: Budget Categories. Separate column headings should be utilized for each

funding source. The total in column g, Section A, must equal the total of all columns in

Section B.

6.3 B. 2 Budget Justification: The Budget Justification consists of a detailed explanation of the

object class categories listed in line 6, Section B, of Standard Form 424A. In preparing the

Budget Justification, states should address the following as requested for each budget category.

• Personnel: Identify all positions to be supported by title and the amounts of time (e.g. %

of time) to be expended on SEP, the base pay rate, and the total direct personnel

compensation.

• Fringe Benefits: If fringe cost rates are approved by a federal agency, identify the agency

and date of latest rate agreement and include a copy of the rate agreement with the

application. If fringe cost rates are not approved by a federal agency, explain how total

fringe benefit costs were calculated. Your calculations should identify all rates used

along with the base they were applied to (and how the base was derived), and a total

for each (along with the grand total). If there is an established computation

methodology approved for state-wide use, provide a copy with the application.

• Travel: Provide the purpose of travel, such as professional conference(s), DOE

sponsored meeting(s), project monitoring, etc. Identify the number of trips, and the

destination/location if known. If there is any foreign travel it should be identified.

Provide the basis for the travel estimate such as past trips, current quotations, federal

or state travel regulations, etc. All listed travel must be necessary or beneficial to the

performance of the State Energy Program. States are encouraged to budget funds for

appropriate national and regional conferences such as Regional Energy Efficiency

Organizations (REEO) and National Association of State Energy Officials (NASEO)

meetings.

• Equipment: Equipment is defined as an item with an acquisition cost greater than

$5,000 and a useful life expectancy of more than one year. List all proposed equipment

and briefly justify its need as it applies to the objectives of this award. Provide a basis of

cost such as vendor quotes, catalog prices, prior invoices, etc. If the equipment is being

proposed as cost match and was previously acquired, provide the value of its

contribution to the project and a rationale for the estimated value shown. If it is new

equipment that will retain a useful life upon completion of the project, provide a

rationale for the estimated value shown. Also, indicate whether the equipment is being

used for other projects or is 100% dedicated to this project.

• Supplies: Supplies are defined as items with an acquisition cost of $5,000 or less or a

useful life expectancy of less than one year. Supplies are generally consumed during the

project performance. List all proposed supplies and the estimated cost and briefly justify

the need for the supplies as they apply to the objectives of this award. Supply items

must be direct costs to the project and not duplicative of supply costs included in the

indirect pool that is the basis of any indirect rate applied for this project. Provide a basis

of cost for each item listed. Examples include vendor quotes, prior purchases of similar

or like items, published price list, etc.

• Contractual: Sub-recipients, vendors, contractors and consultants – All sub-recipients,

vendors, contractors and consultants and their estimated costs should be identified.

Use TBD if the entity is unknown. Provide a brief description of the work to be

performed or the service to be provided and reference the individual market title the

work or service falls under. Include the basis of cost for each item listed (competitive,

historical, quote, catalog, etc.)

• Other Direct Costs: Other direct costs are direct cost items required for the project that

do not fit clearly into other categories. These direct costs must not be included in the

indirect costs (if indirect costs are proposed for this project). Examples are: conference

fees, meetings within the scope of work, subscription costs, printing costs, etc., that can

be directly charged to the project and are not duplicated in indirect costs (overhead

costs). Provide a general description, cost and justification of need for each direct cost

item. Provide a basis of cost for each item. Examples include vendor quotes, prior

purchases of similar or like items, published price list, etc.

• Indirect Costs: If the indirect cost rate has been approved by a federal agency, identify

the agency and the date of the latest rate agreement and submit a copy of the

agreement with the application. If the indirect cost rate has not been approved by a

federal agency, provide the basis for computation of rates including the types of

benefits to be provided, the rate(s) used and the cost basis for each rate.

6.3. C. MASTER FILE

The Master File should include, wherever practicable, information on the state’s overall

strategic energy plan and its key elements, its strategic goals and objectives, and how its SEP

activities fit into that overall plan. The Master File should be updated annually as appropriate.

The Master File should:

• Explain how implementing the plan will conserve energy;

• Explain how the state will measure progress toward attaining its goals;

• Explain how the plan satisfies the minimum criteria for the required (mandatory)

activities; and

• Provide a plan for state monitoring that describes how the state conducts the

administrative and programmatic oversight for programs implemented by other

agencies within the state, contractors employed by the state, or sub-recipients of

financial assistance from the state.

If a state has completed certain mandatory activities, this may also be indicated in the Master

File. The Master File should be updated as appropriate.

6.3. C.1. Measuring Progress toward the EPAct 2005 Goal:

The Energy Policy Act of 2005 (EPAct), PL 109-58, Title I, Subtitle B, Section 123, made two

revisions to the legislation governing SEP.

The first amends the provisions regarding State Plans by adding a subsection, as follows:

“(g) The Secretary shall, at least once every 3 years, invite the Governor of each state to review

and, if necessary, revise the energy conservation plan of such state submitted under subsection

(b) or (e) [the Annual State Plan]. Such reviews should consider the energy conservation plans

of other states within the region, and identify opportunities and actions carried out in pursuit of

common energy conservation goals.”

With the issuance of this Program Guidance, states are invited to review their SEP State Plans

with a view toward regional/multi-state collaboration. DOE will continue to work with the

NASEO, the National Governors Association, REEOs and other state and local stakeholders to

foster and support regional/multi-state cooperation and collaboration.

The second EPAct revision amended the provisions regarding the energy efficiency goals

established by the states, as follows:

“Each state energy conservation plan with respect to which assistance is made available under

this part on or after the date of enactment of the Energy Policy Act of 2005 shall contain a goal,

consisting of an improvement of 25 percent or more in the efficiency of use of energy in the

state concerned in calendar year 2012 as compared to calendar year 1990, and may contain

interim goals.”

States must indicate within Section 5 of the Master File in the 2018 State Plan whether it has

met or exceeded its 25 percent goal. If a state has not met or exceeded its 25 percent goal, it

must describe how it plans to improve its efficiency, as described in EPAct, by 25%, and provide

a target date by which this goal will be met.

Energy usage by states is available from the Energy Information (EIA). The Annual Energy

Outlook (AEO), from which state energy data can be gathered, is typically released in late April

or early May. Information on Gross Domestic Product by state can be gathered from the U.S.

Department of Commerce Bureau of Economic Analysis (BEA) at the following website:

http://www.bea.gov/regional/index.htm.

The Energy Information Administration (EIA) State Energy Data System (SEDS) database

provides a common data source for all states working toward the EPAct goal. A state should use

the relevant SEDS data for 1990 as a baseline to calculate its goals, and then link each element

of its State Plan to the appropriate goal. SEDS data can be found at:

http://www.eia.doe.gov/emeu/states/_seds.html

Excellent state-specific information on energy consumption can also be found in EIA’s State

Profiles, at: http://www.eia.gov/state/

6.3. C.2. Ongoing ARRA Financing Programs

The following template language should be included in Box 12, Monitoring Approach, of the

Master File for any states continuing an ARRA Financing Program:

“Following the end of [State Energy Office’s Name]’s SEP ARRA grant [ARRA Grant Number},

[State Energy Office’s Name] chose to continue financing program(s) established under our

SEP ARRA Grant per SEP guidance series 10-008. This guidance series outlines the continuing

administration and reporting required. No dollars have been transferred from the ARRA

award to the Annual award as the dollars were expended during the period of performance

of the ARRA award. Monitoring information on the programs, including the scope and

quarterly financial information, can be found in the Financial Programs Report, submitted

quarterly as part of [State Energy Office’s Name}’s SEP Annual grant quarterly reporting

requirements.”

For those states with active ARRA-funded RLFs, either self or third-party administered, please

address the following items in Box 12, Monitoring Approach, of the Master File:

• Provide citations to any applicable state regulations or legislation regarding defaults

or write-offs.

• Define what constitutes a loan being in default, including the period of time needed

to pass since a payment was made for a loan to be considered in default status.

• Describe the policies and procedures used to collect loan payments and / or reclaim

defaulted loans (in order of occurrence).

• Describe the policies and procedures to determine when a loan in default is written

off.

• Include any other pertinent information that applies to your loan default and write-

off process.

If a state is interested in repurposing funds within an ARRA-funded financing program to a grant

program or a new financing program, the state must send a repurposing request to its Project

Officer and to the email inbox at SEPFinancingPrograms@ee.doe.gov. The repurposing request

should indicate how the state would reword the “description section” of its PAGE Financial

Programs Report (FPR), outline the additional metrics that would be added to the “metrics

section” of the FPR, and detail the revised dollar amounts. Written approval must be obtained

by the Contracting Officer before a state can implement the new program. Repurposing

requests may be submitted January 1-31 and July 1-31. States may submit repurposing

requests outside of these time frames in emergency situations, but must include a statement as

to why it is necessary to request repurposing outside of the January 1-31 and July 1-31

windows. Please consult pages 10-11 of SEP Program Notice 10-008E, Guidance for State

Energy Program Grantees on Financing Programs, for additional information on submitting

repurposing requests.

http://www.energy.gov/sites/prod/files/2016/07/f33/SEP%20Program%20Notice%2010-

008E.pdf

If a state is interested in moving ARRA financing program funds from one financing program to

another financing program within the FPR, the state should enter an Inter-Program Transfer in

the FPR, provide an explanation in the FPR Remarks section, and notify its Project Officer of the

transfer. Contacting Officer approval is not required for Inter-Program Transfers.

A Financial Programs Report (FPR) must be submitted quarterly, but a Quarterly Progress

Report and SF-425 are not required for ARRA Financing Program activities. The FPR is available

in PAGE and must be completed quarterly. The FPR requires the state to report metrics for each

financing program.

For further guidance, see SEP Program Notice 10-006D “DOE Reporting Requirements for the

State Energy Program”. The guidance can be found at:

http://energy.gov/eere/wipo/downloads/state-energy-program-notice-10-006d-reporting-

requirements

6.3. D. ANNUAL FILE

The Annual File section of the State Plan describes each market area and program activity for

which the state requests financial assistance for a given year, including budget information and

milestones for each activity, and the intended scope and goals to be attained either

qualitatively or quantitatively. The SEP Narrative Information Worksheets capture this

information. States are strongly encouraged to structure the activities within the market areas

narrowly such that each market area represents only a single state-implemented program or

activity. The Annual File should account for all funds budgeted within the program year,

including funds for administrative activities. This includes match and PVE funds. The Annual File

must include at least one process metric for each market title. Market titles that are

administrative only are exempt from this requirement.

The description section of the Annual File should consist of a concise description of the

activities that will be completed under each market title, including goals and objectives, with

enough specificity to allow DOE to determine that the proposed work meets SEP requirements

and includes no prohibited activities. Specific projects and programs known at the time of

application should be identified and described.

Process metrics are an important element of formula grant reporting, and are described in

detail in the reporting guidance (SEP Program Notice Series 10-006D

https://energy.gov/sites/prod/files/2014/09/f18/SEPProgramNotice_10-

006D_ReportingRequirements_Effective_Sept_19_2014.pdf The attached list of process metrics

can also be found at: https://energy.gov/eere/wipo/downloads/eecbg-10-07csep-10-006b-

attachment-1-process-metrics-list

Some activities funded by SEP formula grants cannot be measured meaningfully with the

process metrics identified in PAGE. States are encouraged to consult their Project Officers to

develop user-defined metrics that better capture the work they will be performing. SEP

activities that do not fit well into the metrics section should be reported in the Milestone

section. States should list planned milestones in the Program Year Milestones section in their

applications. Finally, states are encouraged to use the narrative description sections when

preparing PAGE quarterly reports to provide additional information.

For each market title, states should identify all funding sources and the dollar amounts

allocated. The sum of the budgets of each market title must equal the totals in Section A of the

SF424A. See 10 CFR Part 420.13 for more specific requirements on State Plans.

STATE PLAN ACTIVITY CODES

States should identify program activities under the market areas and topic categories. Use of

the markets and topic categories assists DOE in tracking grant-funded activities and gathering

information on SEP regionally and nationwide. DOE is often required to provide analyses,

justifications, and recommendations based on the information provided by the states. The use

of these categories, which are included in the Narrative Information Worksheet, also assists in

developing performance metrics for each activity.

MANDATORY REQUIREMENTS

The following activities and details on compliance are required in each State Plan:

• Establish mandatory lighting efficiency standards for public buildings;

• Promote carpools, vanpools, and public transportation;

• Incorporate energy efficiency criteria into procurement procedures;

• Implement mandatory thermal efficiency standards for new and renovated buildings, or,

in states that have delegated such matters to political subdivisions, adopt model codes

for local governments to mandate such measures;

• Permit right turns at red traffic lights and left turns from a one-way street onto a one-

way street at a red light after stopping; and

• Ensure effective coordination among various local, state, and federal energy efficiency,

programs for renewable energy and alternative transportation fuel within the state.

See 10 CFR Part 420.15 for more specific requirements on mandatory activities.

OPTIONAL PROGRAM ACTIVITIES

States may wish to consider the following program areas for inclusion in their State Plans:

• Program activities of public education to promote energy efficiency, renewable energy,

and alternative transportation fuels;

• Program activities to increase transportation energy efficiency, including programs to

accelerate the use of alternative transportation fuels for government vehicles, fleet

vehicles, taxis, mass transit, and privately owned vehicles;

• Program activities for financing energy efficiency measures and renewable energy

measures, which may include loan programs and performance contracting programs for

leveraging of additional public and private sector funds and program activities that allow

rebates, grants, or other incentives for the purchase of energy efficiency measures and

renewable energy measures;

• Program activities for encouraging and for carrying out energy audits with respect to

buildings and industrial facilities (including industrial processes) within the state;

• Program activities to promote the adoption of integrated energy plans that provide for

(a) periodic evaluation of a state's energy needs, available energy resources (including

greater energy efficiency), and energy costs; and (b) utilization of adequate and reliable

energy supplies, including greater energy efficiency, that meet applicable safety,

environmental, and policy requirements at the lowest cost;

• Program activities to promote energy efficiency in residential housing, such as (a)

program activities for development and promotion of energy efficiency rating systems

for newly constructed housing and existing housing so that consumers can compare the

energy efficiency of different housing; and (b) program activities for the adoption of

incentives for builders, utilities, and mortgage lenders to build, service, or finance

energy efficient housing;

• Program activities to identify unfair or deceptive acts or practices that relate to the

implementation of energy efficiency measures and renewable energy measures and to

educate consumers concerning such acts or practices;

• Program activities to modify patterns of energy consumption so as to reduce peak

demands for energy and improve the efficiency of energy supply systems, including

electricity supply systems;

• Program activities to promote energy efficiency as an integral component of economic

development planning conducted by state, local, or other governmental entities or by

energy utilities;

• Program activities (enlisting appropriate trade and professional organizations in the

development and financing of such programs) to provide training and education

(including, if appropriate, training workshops, practice manuals, and testing for each

area of energy efficiency technology) to building designers and contractors involved in

building design and construction or in the sale, installation, and maintenance of energy

systems and equipment to promote building energy efficiency;

• Program activities for the development of building retrofit standards and regulations,

including retrofit ordinances enforced at the time of the sale of a building;

• Program activities to provide support for prefeasibility and feasibility studies for projects

that utilize renewable energy and energy efficiency resource technologies in order to

facilitate access to capital and credit for such projects;

• Program activities to facilitate and encourage the voluntary use of renewable energy

technologies for eligible participants in federal agency programs, including the Rural

Electrification Administration and the Farmers Home Administration;

• Program activities to support industrial energy efficiency and combined heat and power;

• Program activities to quantify the co-benefits of energy efficiency and renewable

energy, including improvements in air quality, reductions in greenhouse gas emissions,

improvements in public health and economic development; and

• Program activities to implement the Energy Technology Commercialization Services

Program.

See 10 CFR Part 420.17 for more specific requirements on optional activities.

STATE ENERGY EMERGENCY PLANS

States shall submit a certification (via letter) as an attachment to their application that they

have an energy emergency/assurance plan on file and that it is available to DOE upon request.

For states that desire to update their plan, model guidelines have been developed for

incorporating energy efficiency and renewable energy technologies into a state’s energy

emergency plan. These guidelines can be viewed at: http://naseo.org/eaguidelines/

6.3 E. EXPENDITURE PROHIBITIONS AND LIMITATIONS

Prohibitions: States are prohibited from using SEP financial assistance to:

• Fund construction, such as construction of mass transit systems and exclusive bus lanes,

or for the construction or repair of buildings or structures;

• Purchase land, a building or structure, or any interest therein;

• Subsidize fares for public transportation;

• Subsidize utility rate demonstrations or State tax credits for energy conservation or

renewable energy measures; or

• Conduct or purchase equipment to conduct research, development, or demonstration

of energy efficiency or renewable energy techniques and technologies not commercially

available.

Limitations:

• No more than 20 percent of the financial assistance awarded to the State for this

program shall be used to purchase office supplies, library materials, or other equipment

whose purchase is not otherwise prohibited.

• Demonstrations of commercially available energy efficiency or renewable energy

techniques and technologies are permitted and are not subject to the construction

prohibition or the 20 percent on equipment and direct purchase limitations.

• A State may use regular or revolving loan mechanisms to fund SEP activities that are

consistent with SEP rules and that are included in the approved State plan. Loan

repayments and interest on loan funds may be used only for activities that are

consistent with the rules and are included in the State's approved plan.

• A State may use funds for the purchase and installation of equipment and materials for

energy efficiency measures and renewable energy measures, subject to the following:

- Such use must be included in the State's approved plan (and if PVE funds are

used, the use must be consistent with any judicial or administrative terms and

conditions imposed upon State use of such funds).

- Such use is limited to no more than 50 percent of all funds allocated by the

State to SEP in any given year, regardless of source, except that this limitation

shall not include regular and revolving loan programs funded with PVE funds.

States may request a waiver of the 50 percent limit from DOE for good cause.

For regular and revolving loan funds, loan documents shall ensure repayment of

principal and interest within a reasonable period of time, and shall not include

provisions for loan forgiveness.

• Funds may be used to supplement and no funds may be used to supplant

weatherization activities under the Weatherization Assistance Program for Low-Income

Persons.

• States must document their NEPA and Section 106 determinations for DOE review.

See 10 CFR Part 420.18 for more detailed expenditure prohibitions and limitations.

6.3. F. OTHER FORMS

The following files should be submitted as attachments with your application if applicable:

• Indirect Rate Agreement or Rate Proposal.

• Certifications regarding Lobbying (SF-LLL Disclosure Form to report lobbying).

http://energy.gov/sites/prod/files/CERTSASSURANCESSF424.pdf

• A document containing a link to the State’s latest single or program-specific audit as

required by 2 CFR 200 Subpart F.

• A document providing the name, phone number and email address of the Principal

Investigator and Business Officer.

6.3. G. ENVIRONMENTAL QUESTIONNAIRE

National Environmental Policy Act Information

DOE must comply with the National Environmental Policy Act (NEPA) prior to authorizing the

use of Federal funds. In addition, DOE must consider the effects on historic properties, pursuant

to section 106 of the National Historic Preservation Act (NHPA), and DOE must consider the

impacts to floodplains and wetlands, pursuant to 10 CFR Part 1022 – Compliance with

Floodplain and Wetland Environmental Review Requirements. To streamline these required

reviews, DOE carries out each of these reviews under the umbrella of its NEPA review.

DOE has determined the following bounded categories of activities that are funded under the

SEP- ALRD 2018 are categorically excluded from further NEPA review, absent extraordinary

circumstances, cumulative impacts, or connected actions that may lead to significant impacts

on the environment, or any inconsistency with “integral elements” (as contained in 10 C.F.R.

Part 1021, Appendix B) as they relate to a particular project. To fall under the categorical

exclusion, the activities must also, adhere to the requirements of the respective state’s

programmatic agreement with its State Historic Preservation Office (SHPO) and not have short-

term or long-term adverse impacts to floodplain or wetland areas.

The Bounded Categories below only apply to projects funded under SEP-ALRD 2018.

Bounded Categories:

1. Administrative activities associated with management of the designated State

Energy Office and management of programs and strategies to encourage energy

efficiency and renewable energy, including energy audits.

2. Development and implementation of programs and strategies to encourage

energy efficiency and renewable energy.

3. Development and implementation of training programs.

4. Development and implementation of building codes and inspection services,

and associated training and enforcement of such codes in order to support code

compliance and promote building energy efficiency.

5. Implementing financial incentive programs such as rebates and energy savings

performance contracts for existing facilities or for energy efficient equipment,

provided that the incentives are not so large that they would be deemed to be

grants that create projects that would not otherwise exist. (For example, giving

a wind farm that cost $100 million a sum of $50 million and calling it a rebate

would not fall within this Bounded Category).

6. Funding energy efficiency upgrades, provided that projects adhere to the

requirements of the respective state’s programmatic agreement with its SHPO,

and are limited to:

a. installation of insulation;

b. installation of energy efficient lighting;

c. HVAC upgrades (to existing systems);

d. weather sealing;

e. purchase and installation of ENERGY STAR appliances (includes, but not

limited to, furnaces and air conditioners);

f. replacement of windows and doors; and

g. high efficiency shower/faucet upgrade.

7. Development, implementation, and installation of onsite renewable energy

technology from renewable resources, provided that projects are installed in or

on an existing structure or within the boundaries of a facility and limited to:

a. Solar Electricity/Photovoltaic - appropriately sized system or unit not to

exceed 60 kWs.

b. Wind Turbine - 20 kW or smaller.

c. Solar Thermal (including solar thermal hot water) - system must be 20

kW or smaller.

d. Ground Source Heat Pump - 5.5 tons of capacity or smaller,

horizontal/vertical, ground, closed-loop system.

e. Combined Heat and Power System - boilers sized appropriately for the

buildings in which they are located.

f. Biomass Thermal - 3 MMBTUs per hour or smaller system with

appropriate Best Available Control Technologies (BACT) installed and

operated.

8. Development, implementation and installation of energy efficient or

renewable energy-powered systems (limited to lighting, cooling, heat) installed

in existing buildings and facilities.

9. Installation of fueling pumps and systems for fuels such as compressed natural

gas, hydrogen, ethanol and other commercially available biofuels, (but not

storage tanks) installed on the site of a current fueling station.

10. Purchase of alternative fuel vehicles.

11. Installation of electric vehicle charging stations installed on existing facilities.

The state is responsible for:

Identifying and promptly notifying DOE of extraordinary circumstances, cumulative impacts, or

connected actions that may lead to significant impacts on the environment, or any

inconsistency with the “integral elements” (as contained in 10 C.F.R. Part 1021, Appendix B) as

they relate to a particular Project; compliance with Section 106 of the National Historic

Preservation Act (NHPA), and 10 CFR Part 1022.4 –Compliance with Floodplain and Wetland

Environmental Review Requirements, as applicable. Additionally, the documentation of the

above reviews for NEPA and Section 106 must be available for DOE review at all times.

DOE is required to consider floodplain management and wetland protection as part of its

environmental review process (Subpart B of 10 CFR 1022). As part of this required review, DOE

determined requirements set forth in Subpart B of 10 CFR 1022 are not applicable to the

activities described in Bounded Categories 1-6g above that would occur in a floodplain or

wetland because the activities would not have short-term or long-term adverse impacts to the

floodplain or wetland. These activities are administrative or minor modifications of existing

facilities to improve environmental conditions. All other integral elements and environmental

review requirements are still applicable. All projects (except those under Bounded Categories

1-6g) must document that project activities do not occur in a floodplain or wetland. If the

project activities do occur in a floodplain or wetland (except those under Bounded Categories

1-6g), those project activities are subject to additional NEPA review and approval by DOE.

Activities/projects not within the bounded categories listed above are not included under the

ALRD categorical exclusion and are subject to additional NEPA review and approval by DOE,

provided they are funded using formula, match or Petroleum Violation (PVE) funds and are

included within the State Annual Plan. For activities/projects requiring additional NEPA review,

states must complete the environmental questionnaire https://www.eere-

pmc.energy.gov/NEPA.aspx and receive notification from DOE that the NEPA review has been

completed and approved by the Contracting Officer prior to initiating the project or activities.

Due to recent security updates, all NEPA users must create an Applicant-Recipient sign-in

account for the above web site. It is important that the new account be created using the

same email address for all EQ-1 NEPA Environmental submissions submitted for review. If

another email address is used, previous submissions will not be accessible.

Recipients are restricted from taking any action using Federal funds or Petroleum Violation

Escrow (PVE) funds, which would have an adverse effect on the environment or limit the choice

of reasonable alternatives prior to DOE providing a final NEPA determination. If the recipient

moves forward with activities that are not authorized for Federal or PVE funding by the DOE

Contracting Officer in advance of the NEPA determination, the recipient is doing so at risk of

not receiving Federal funding and such costs may not be recognized as allowable cost match.

6.3. H. EXPENDITURES WITHIN A GRANT PERIOD

States should expend all obligated funds within the annual budget period. If a state has

unobligated balances to be authorized by a Contracting Officer for carry-over from one budget

period to another, the state must include an estimate of carry-over funds in its State

Application.

It is imperative for states to spend all funds prior to the end of the period of performance of the

grant. Any remaining unobligated funds will not be transferred to a subsequent award.

Requests to modify awards ending in calendar year 2018 should be submitted at least 90 days

prior to an award’s end date. This will help provide an adequate amount of time for processing

the request prior to the award expiration date. Notwithstanding, DOE cannot guarantee that

all requests submitted at least 90 days prior to the award end date will be approved prior to the

award’s expiration date.

6.4 APPLICATION FORMAT AND CHANGES

6.4. A. CONTENT AND FORM OF APPLICATION

The State Plan application must be submitted via the PAGE online system at

https://www.page.energy.gov/default.aspx

The PAGE Help System has detailed instructions for creating and submitting an annual

application. The Help instructions can be found in PAGE by selecting ‘help’ from the blue

horizontal menu bar, and under the Contents in the left panel selecting ‘SEP’ and the subtopic

for ‘New Grant Application’.

From the Home PAGE, select ‘Create New Application’ then select the ‘Add New Application

Package’. After creating the new application, be sure to use the ‘copy’ icons on the checklist

screen to copy information from your 2017 application documents. The copy icon is in the

status column next to each document listed on the checklist screen. Once the plan has been

completed, be sure to validate and submit the plan.

6.4. B. OTHER SUBMISSION AND REGISTRATION REQUIREMENTS

Electronic Authorization of Applications and Award Documents

Submission of application documents and award documents, including modifications, through

electronic systems used by the Department of Energy, including PAGE and FedConnect,

constitutes the authorized representative’s approval and acceptance of the terms and

conditions of the award. Award acknowledgement via FedConnect constitutes the authorized

representative’s electronic signature.

6.4. C. QUESTIONS/AGENCY CONTACTS

Questions relating to the registration process, system requirements, how an application form

works, or the submittal process must be directed to the PAGE hotline at 866-492-4546, or page-

hotline@ee.doe.gov. States should contact their respective Project Officer on state-specific

questions. Below is a list of current DOE Project Officers assigned to each state or territory.

States Project Officer E-Mail Telephone

Wyoming Pete Davis pete.davis@ee.doe.gov 720-356-1606

Alaska, Guam, Hawaii, Idaho, Northern

Marianas, Washington Kelsie Bell kelsie.bell@ee.doe.gov 720-356-1643

Connecticut, Maine, Massachusetts, New

Hampshire, New York, Rhode Island,

Vermont Henry Fowler henry.fowler@ee.doe.gov 720-356-1595

Illinois, Indiana, Iowa, Michigan, Minnesota,

Missouri, Wisconsin Sharon Gill sharon.gill@ee.doe.gov 720-356-1593

6.5 REPORTING REQUIREMENTS

Guidance has been published that provides the scope and purpose of reporting for SEP formula

grants. SEP Program Notice Series 10-006, most recently published as 10-006D on September

19, 2014, is available at: http://energy.gov/eere/wipo/downloads/state-energy-program-notice-10-006d-reporting-requirements

Reporting requirements are identified on the Financial Assistance Reporting Checklist (FARC),

DOE EERE 355, attached to the award agreement.

Additional policy documents may be found at: https://energy.gov/eere/wipo/state-energy-program-guidance

The awards initiated since 10/1/2010 are subject to the requirement of Reporting Subawards

and Executive Compensation at https://www.fsrs.gov. Please see Part V.C. of the

Administrative and Legal Requirements Document (ALRD) for additional information.

6.5 A. ANNUAL SUMMARY

An Annual Summary must be submitted to the assigned Project Officer at the end of each

program year. The Annual Summary should describe high-impact or exceptionally innovative

activities undertaken during the program year and include information related to: quantitative

energy savings, grant funds allocated to activity, barriers and solutions, and lessons learned.

The Annual Summary should also describe any significant energy related legislative actions or

policies enacted due, at least in part, to DOE formula funds. The Annual Summary must be

submitted no later than 90 days following the end of the budget period. Please see the 2018

Annual Summary Template, which accompanies this Guidance.

Kentucky, North Carolina, Ohio, Puerto Rico,

South Carolina, Tennessee Pete Gingrass pete.gingrass@ee.doe.gov 720-356-1314

Delaware, District of Columbia, Maryland,

New Jersey, Pennsylvania, Virginia, West

Virginia Gordon Gore gordon.gore@ee.doe.gov 720-356-1592

American Samoa, Arizona, California,

Colorado, Nevada, New Mexico, Utah Julie Howe julie.howe@ee.doe.gov 720-356-1628

Kansas, Louisiana, Montana, Nebraska,

North Dakota, Oklahoma, Oregon, South

Dakota, Texas Randall Lamp randall.lamp@ee.doe.gov 720-356-1631

Alabama, Arkansas, Florida, Georgia,

Mississippi, Virgin Islands John Merenda john.merenda@ee.doe.gov 720-356-1620

6.6 STATE ENERGY PROGRAM OPERATIONS MANUAL The State Energy Program Operations Manual is a reference tool for states and program officials within DOE. The Manual was released in 2016 and is updated periodically. http://energy.gov/sites/prod/files/2016/07 /f33/SEP-operations-manual.pdf

CONCLUSION

As the State Energy Program (SEP) and its partners continue to draw both on regular federal appropriations and the valuable lessons and benefits from the Recovery Act, DOE looks forward to continuing to work with its state partners to implement effective SEP programs.

REFERENCE MATERIAL

�/I=�� /, AnnaMaria Garcia, Program Director

Weatherization and Intergovernmental Program Office U.S. Department of Energy Office of Energy Efficiency and Renewable Energy

2018 Administrative and Legal Requirements Document Program Year 2017 SEP Formula Allocations SEP Formula Grant Process Metrics List (SEP 10-006D) 2018 Annual Summary Template 2018 Formula Award Application Checklist